If a regulator forced a natural monopolist to set P = MC
A) the monopolist would earn economic profits.
B) the monopolist would suffer economic losses.
C) the monopolist would break even.
D) the monopolist would earn monopolistic profits.
Answer: B
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Adam makes $25,000 per year and Bob makes $45,000 a year, and they both have the same marginal benefit curve. According to the utilitarian view, if a dollar is transferred from Bob to Adam, then
A) the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative. B) Adam's marginal benefit increases by more than Bob's marginal benefit decreases. C) the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero. D) Adam's marginal benefit decreases by more than Bob's marginal benefit increases.
There are five firms in the cresset industry. The market shares of the five firms are 60 percent, 15 percent, 15 percent, 6 percent, and 4 percent. The Herfindahl index is
a. 96 b. 4,086 c. 10,000 d. 4,102 e. 4,100
When the amount of sales is large, but each sale has a low value, cheating on a cartel arrangement can significantly increase an individual firm's profits and is thus tempting
a. True b. False Indicate whether the statement is true or false
Cost complementarity exists in a multiproduct cost function when:
A. the marginal cost of producing one output is increased when the output of another product is decreased. B. the marginal cost of producing one output is reduced when the output of another product is increased. C. the average cost of producing one output is reduced when the output of another product is increased. D. the average cost of producing one output is increased when the output of another product is increased.